NEW DELHI, India: The Indian government has proposed a defence budget of 6.81 trillion rupees ($78.7 billion) for the fiscal year 2025-26, marking a 9.5% increase from the previous year’s initial estimates.
The increase in defence spending has made India the fourth-largest defence spender globally, following the United States, Russia, and China, further fuelling regional tensions with its aggressive defence policies.
A significant portion of the budget allocation will be spent on wages and pensions rather than modernisation and procurement of new weaponry.
According to budget documents, 4.7 trillion rupees have been earmarked for manpower costs, dwarfing the capital outlay of 1.80 trillion rupees allocated to modernisation and defence procurement.
Analysts said that while the capital expenditure has increased by 4.6% compared to the previous year, it remains insufficient to support India’s military modernisation efforts.
Top global defence spenders
India’s defence spending now constitutes approximately 8% of its Gross Domestic Product (GDP), making it the world’s fourth-largest defence spender after the United States, China, and Russia.
Despite this, experts argue that the budget’s structure, with a heavy emphasis on personnel costs, the country is struggling to keep pace with global military advancements.
Defence analyst Laxman Behera of Jawaharlal Nehru University in New Delhi stated that “with a very marginal increase in capital expenditure, the modernisation will not pick up pace.”
Defence allocations
The budget includes allocations for key military acquisitions, with 486 billion rupees set aside for aircraft and aero engines, and 243.9 billion rupees for the naval fleet.
International media reports indicate that India plans to spend $5.6 billion on new fighter jets and $2.8 billion on expanding its naval capabilities.
The former financial adviser for acquisitions at the Indian Defence Ministry, Amit Cowshish, highlighted a longstanding concern regarding the imbalance in spending priorities.
“Pensions and salaries continue to consume the major chunk of the defence budget, leaving limited room for procurement and modernisation,” he said.
Comparison with global defence budgets
India’s capital expenditure on defence remains significantly lower than that of other major military powers.
In contrast, China’s $225 billion defence budget prioritises investment in artificial intelligence-driven warfare, naval expansion, and missile development.
The United States, with its $842 billion military budget, leads in cyber defence, drone technology, and hypersonic weapons development.
European nations such as France, Germany, and the United Kingdom have also adopted capital-intensive defence strategies, focusing on next-generation fighter jets, space-based defence systems, and high-tech military applications.
India’s low capital allocation—around 20% of its total defence budget—raises concerns about its ability to compete in modern warfare.
Economic challenges
India’s increased military spending comes despite pressing socio-economic challenges. Over 80 million people in the country live below the poverty line, prompting criticism that defence expansion is being prioritised over essential public services.
